BT AGREES COMMERCIAL PARTNERSHIP AND INVESTMENT WITH ONLIVE INC.

BT has entered into a commercial partnership with OnLive Inc., a Silicon Valley based, cloud computing video gaming business, which gives BT exclusive rights to bundle the OnLive® Game Service with broadband in the UK. In conjunction with the commercial partnership, BT has taken a 2.6 per cent shareholding in OnLive Inc.

The revolutionary OnLive® Game Service is a new way to purchase and play video games, which are streamed over the internet, using video compression technology, so the customer can just connect and play. There is no need to wait for games to be downloaded, they run instantly.

It delivers the latest games from many of the world’s leading publishers direct to a customer’s TV, PC or Mac. OnLive works over a wired broadband connection and customers do not need high specification computers to use the service as the complex processing work is done at remote data centres.

OnLive unveiled their service in March 2009 after seven years in development and it officially launches in the US this summer following a successful beta trial. BT will announce further details about its launch plans later this year.

The move by BT into cloud gaming enhances what the company already offers in the entertainment area with BT Vision its on-demand digital TV service.

Gavin Patterson, CEO of BT Retail, said:“Entertainment is going to be at the heart of what we offer customers in the future. The partnership with OnLive complements our existing BT Vision service. It’s great for our customers - they’ll have access to a huge catalogue of games, available instantly on their TV or PC without expensive hardware. And it’s great for BT - it will enhance our premium broadband position and we’ll be entering into a market that’s worth more than£2billion.”

Steve Perlman, CEO of OnLive, said:“The UK market is extremely important to OnLive and our video game publishing partners as we expand into Europe. We view BT as the ideal UK partner. As gamers are moving increasingly to online game distribution, OnLive delivers video games as a pure form of online media, playable instantly on almost any video-capable device attached to the internet. The implications are nothing short of transformative to video games and in time, all interactive media. OnLive is delighted to be pioneering this revolutionary technology in the UK together with BT”.

Enquiries about this news release should be made to the BT Group Newsroom on its 24-hour number: 020 7356 5369. From outside the UK dial + 44 20 7356 5369.

BT is one of the world’s leading providers of communications solutions and services operating in more than 170 countries. Its principal activities include the provision of networked IT services globally; local, national and international telecommunications services to our customers for use at home, at work and on the move; broadband and internet products and services and converged fixed/mobile products and services. BT consists principally of four lines of business: BT Global Services, Openreach, BT Retail and BT Wholesale.

In the year ended 31 March 2010, BT Group’s revenue was£20,911 million

British Telecommunications plc (BT) is a wholly-owned subsidiary of BT Group plc and encompasses virtually all businesses and assets of the BT Group. BT Group plc is listed on stock exchanges in London and New York.

OnLive is the pioneer of on-demand, instant-play video game services, delivering real-time interactive experiences and rich media through the Internet. With groundbreaking, patent-pending video compression technology, OnLive harnesses cloud computing to provide the power and intelligence needed to instantly deliver the latest, high-end game titles directly via a sleek, inexpensive MicroConsole TV Adapter™, or on PCs and Macs via a small browser plug-in. OnLive technology is backed by over 100 patents and patents pending. The company is headquartered in Palo Alto, CA, and investors include BT, AT&T, Warner Bros., Autodesk and Maverick Capital. More information is available at www.onlive.com.

OnLive, Brag Clips and MicroConsole are trademarks or registered trademarks of OnLive, Inc.

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